Microeconomic November

question

the marginal cost curve insect both the average variable cost and the average total cost curves at their (blank) points

answer

Minimum

question

As the level of output increases, the difference between the value of average total cost and average variable cost

answer

decreases because average fixed cost decreases as output increases.

question

In the initial stages of production, specialization and division of labor lead to an increasing marginal product of workers

answer

Allowing workers to concentrate on a few tasks so that they become more skilled at doing them quickly and efficiently

question

The law of diminishing states that

answer

Adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline

question

Is it possible for a firm to experience a technological change that would increase the marginal product while leaving the average product of labor unchanged

answer

No. An increase in the marginal product of labor will increase the average product of labor

question

Which of the following is true of the relationship between the average product of labor and the marginal product of labor

answer

Whenever the marginal product of labor is greater than the average product of labor, the average product of labor must be increasing.

question

The law of diminishing returns applies

answer

short run

question

When the marginal product of labor is greater than the average product labor, then the average product of labors must be

answer

Increasing

question

What is the difference between the short run and the long run

answer

In the short run, at least one of a firm's inputs is fixed, while in the long run, a firm is able to vary all its inputs and adopt new technology.

question

Any cost that remains unchanged as output changes represents a firm's

answer

fixed cost

question

Any cost that changes as output changes represents a firm's

answer

variable cost

question

Which of the following is most likely to be a fixed cost for a farmer

answer

insurance premiums on property

question

Which of the following is most likely to a variable cost for a business firm

answer

cost of shipping products

question

An implicit cost is

answer

a non-monetary opportunity cost

question

How are implicit costs different from explicit costs?

answer

An explicit cost is a cost that involves spending money, while an implicit cost is a nonmonetary cost.

question

A firms production function is best described as

answer

illustrating the relationship between inputs and the maximum amounts of output that the firm can produce with these inputs.

question

A short run production holds constant

answer

The amount of capital

question

The production function is the relationship between

answer

the inputs employed by a firm and the maximum output it can produce with those inputs.

question

What is the difference in the short run and the long run?
In the short run,

answer

at least one of the firm's inputs is fixed,
while in the long run, the firm is able to vary all its inputs, adopt new technology, and change the size of its physical plant

question

What is the distinction between the economic short run and the economic long run

answer

In the short run, at least one input is fixed, but in the long run, the firm can vary all inputs.

question

Which cost are affected by the level of output produced

answer

Variable cost

question

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the

answer

Production function

question

To estimate the price elasticity of demand, economists need to know

answer

the demand curve for a product

question

Firms often rely on market experiments to calculate the price elasticity of demand for a new product.

answer

True

question

What is the difference between total cost and variable cost in the long run?
In the long run,

answer

the total cost of production equals the variable cost of production.

question

Economics of scale occurs

answer

When a firms long run average cost decrease with output

question

For which of the following reasons may firms experience economies of scale

answer

All of the above

question

Disecomonies of scale

answer

When a firms long run average cost increase with output

question

What is the main reason that firms eventually encounter diseconomies of scale as they keep increasing the size of their store or factory

answer

Firms have difficulty coordinating production.

question

A firm might experience economies of scale because

answer

As a firm

question

Which of the following terms to the lowest cost at which a firm is able to produce a given level of output in the long run, when no inputs are fixed

answer

The long run average cost curve

question

Economic of scale happen when the firms long run average total cost as our out increases

answer

Decreases

question

Suppose a firms average total cost curve is decreasing with output. What can be said of its marginal cost curve?
The firms marginal cost curve must be

answer

Below the average total cost curve

question

What is the difference between technology and technological change

answer

Technology is the process of using inputs to make output, while technological change is when a firm is able to produce the same output using fewer inputs

question

Is it possible for technological change to be negative? If so, give an example

answer

It is possible for technological change to be negative. An example is when a hurricane damages a firm's facilities

question

A firm is able to cut each worker's wage rate by 10 percent and still produce the same level of output.

answer

This is not an example of positive technological change

question

A training program makes a firms workers more healthy and productive

answer

This is an example of positive technological change

question

In economics, the best definition of technology is

answer

the process a firm uses to turn inputs into outputs

question

further, positive technological change is defined as

answer

being able to produce more output using the same inputs
being able to produce the same output using fewer inputs

question

Technology is

answer

The processes a firm uses to turn inputs into outputs of goods and services

question

An example of technological change is

answer

All of the above

question

Negative technology change is when

answer

A firm must use more inputs to produce the same output

question

When a positive technological change occurs

answer

more output can be produced from the same inputs

the same output can be produced with fewer inputs

question

cross-price elasticity of demand

answer

the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good

question

Income Elasticity

answer

percentage change in quantity demanded/percentage change in price

question

For a normal good, the income elasticity of demand will be

answer

positive, but for an inferior good, the income elasticity of demand will be negative

question

The income elasticity of demand for a normal good is and for an inferior good is

answer

Positive;negative

question

If the income elasticity of SUVs is greater than 1 what is the good considered

answer

luxury

question

What is the formula for the price elasticity of demand

answer

percentage change in quantity demanded/percentage change in price

question

How is price elasticity of demand measured?

answer

By dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price.

question

What happens when the quantity is very responsive to changes in price?
The percentage change in quantity demanded will be

answer

Greater than the percentage change in price

1 of 51

question

the marginal cost curve insect both the average variable cost and the average total cost curves at their (blank) points

answer

Minimum

question

As the level of output increases, the difference between the value of average total cost and average variable cost

answer

decreases because average fixed cost decreases as output increases.

question

In the initial stages of production, specialization and division of labor lead to an increasing marginal product of workers

answer

Allowing workers to concentrate on a few tasks so that they become more skilled at doing them quickly and efficiently

question

The law of diminishing states that

answer

Adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline

question

Is it possible for a firm to experience a technological change that would increase the marginal product while leaving the average product of labor unchanged

answer

No. An increase in the marginal product of labor will increase the average product of labor

question

Which of the following is true of the relationship between the average product of labor and the marginal product of labor

answer

Whenever the marginal product of labor is greater than the average product of labor, the average product of labor must be increasing.

question

The law of diminishing returns applies

answer

short run

question

When the marginal product of labor is greater than the average product labor, then the average product of labors must be

answer

Increasing

question

What is the difference between the short run and the long run

answer

In the short run, at least one of a firm's inputs is fixed, while in the long run, a firm is able to vary all its inputs and adopt new technology.

question

Any cost that remains unchanged as output changes represents a firm's

answer

fixed cost

question

Any cost that changes as output changes represents a firm's

answer

variable cost

question

Which of the following is most likely to be a fixed cost for a farmer

answer

insurance premiums on property

question

Which of the following is most likely to a variable cost for a business firm

answer

cost of shipping products

question

An implicit cost is

answer

a non-monetary opportunity cost

question

How are implicit costs different from explicit costs?

answer

An explicit cost is a cost that involves spending money, while an implicit cost is a nonmonetary cost.

question

A firms production function is best described as

answer

illustrating the relationship between inputs and the maximum amounts of output that the firm can produce with these inputs.

question

A short run production holds constant

answer

The amount of capital

question

The production function is the relationship between

answer

the inputs employed by a firm and the maximum output it can produce with those inputs.

question

What is the difference in the short run and the long run?
In the short run,

answer

at least one of the firm's inputs is fixed,
while in the long run, the firm is able to vary all its inputs, adopt new technology, and change the size of its physical plant

question

What is the distinction between the economic short run and the economic long run

answer

In the short run, at least one input is fixed, but in the long run, the firm can vary all inputs.

question

Which cost are affected by the level of output produced

answer

Variable cost

question

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the

answer

Production function

question

To estimate the price elasticity of demand, economists need to know

answer

the demand curve for a product

question

Firms often rely on market experiments to calculate the price elasticity of demand for a new product.

answer

True

question

What is the difference between total cost and variable cost in the long run?
In the long run,

answer

the total cost of production equals the variable cost of production.

question

Economics of scale occurs

answer

When a firms long run average cost decrease with output

question

For which of the following reasons may firms experience economies of scale

answer

All of the above

question

Disecomonies of scale

answer

When a firms long run average cost increase with output

question

What is the main reason that firms eventually encounter diseconomies of scale as they keep increasing the size of their store or factory

answer

Firms have difficulty coordinating production.

question

A firm might experience economies of scale because

answer

As a firm

question

Which of the following terms to the lowest cost at which a firm is able to produce a given level of output in the long run, when no inputs are fixed

answer

The long run average cost curve

question

Economic of scale happen when the firms long run average total cost as our out increases

answer

Decreases

question

Suppose a firms average total cost curve is decreasing with output. What can be said of its marginal cost curve?
The firms marginal cost curve must be

answer

Below the average total cost curve

question

What is the difference between technology and technological change

answer

Technology is the process of using inputs to make output, while technological change is when a firm is able to produce the same output using fewer inputs

question

Is it possible for technological change to be negative? If so, give an example

answer

It is possible for technological change to be negative. An example is when a hurricane damages a firm's facilities

question

A firm is able to cut each worker's wage rate by 10 percent and still produce the same level of output.

answer

This is not an example of positive technological change

question

A training program makes a firms workers more healthy and productive

answer

This is an example of positive technological change

question

In economics, the best definition of technology is

answer

the process a firm uses to turn inputs into outputs

question

further, positive technological change is defined as

answer

being able to produce more output using the same inputs
being able to produce the same output using fewer inputs

question

Technology is

answer

The processes a firm uses to turn inputs into outputs of goods and services

question

An example of technological change is

answer

All of the above

question

Negative technology change is when

answer

A firm must use more inputs to produce the same output

question

When a positive technological change occurs

answer

more output can be produced from the same inputs

the same output can be produced with fewer inputs

question

cross-price elasticity of demand

answer

the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good

question

Income Elasticity

answer

percentage change in quantity demanded/percentage change in price

question

For a normal good, the income elasticity of demand will be

answer

positive, but for an inferior good, the income elasticity of demand will be negative

question

The income elasticity of demand for a normal good is and for an inferior good is

answer

Positive;negative

question

If the income elasticity of SUVs is greater than 1 what is the good considered

answer

luxury

question

What is the formula for the price elasticity of demand

answer

percentage change in quantity demanded/percentage change in price

question

How is price elasticity of demand measured?

answer

By dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price.

question

What happens when the quantity is very responsive to changes in price?
The percentage change in quantity demanded will be

answer

Greater than the percentage change in price

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